Here’s How Much Tariffs Are Damaging the Scotch Industry
Export losses to the U.S. are costing the industry hundreds of millions per year
A new report by the Scotch Whisky Association (SWA) suggests dwindling single malt exports to the United States due to increased tariffs have cost the industry upwards of £500 million (about $680 million) in the last year.
According to the SWA, a 25% tariff on single malt Scotch introduced in the U.S. in 2019 has led to a 35% decrease in Scotland’s whisky exports here between October 2019 and November of 2020, which amounts to a loss of over half a billion pounds. As a reminder, this tariff is part of an ongoing trade war that stretches back to the mid-2000s and involves airplane manufacturing subsidies.
The situation may not improve soon: A failed year-end negotiation during Brexit talks meant the U.K. government could not conclude a “mini-deal” with the United States that would have removed Scotch tariffs (among other products).
“The current situation is unsustainable,” said Karen Betts, Chief Executive of the Scotch Whisky Association, in a statement. “Since tariffs were put in place, our exports to the US have fallen by 35%, amounting to over half a billion pounds in lost exports. This is being borne by large and small producers alike, who are losing sales and market share in what has been for decades the industry’s largest and most valuable market, which they may never now recover.”
Interestingly enough, exports are down but actual sales in the drinks category are up; sales of Scotch rose 37% in 2020, according to The Drinks Business. Turns out we are drinking more “super premium” stuff, even as the prices rise.
Meanwhile, a retaliatory tariff on American whiskey by the European Union has led to a $289 million decline in those whiskey exports from the U.S. in the past year, and an automatic hike to 50% is scheduled for June 2021.
Without picking sides in a 15-plus-year trade war, it would be ideal if products unrelated to the current stand-off were exempt from tariffs. And drinkers everywhere would agree.
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